Duval County property values buck Florida trend by declining in 2013

Saturday

From Tampa to Fort Lauderdale to Miami to Orlando to St. Petersburg, Florida's major urban counties are finally seeing their tax bases growing again.

But Jacksonville is still stuck in reverse, making it increasingly difficult for the city to balance its budget.

Even though the real estate industry showed signs of recovery in 2012, Duval County's taxable property value dipped again, marking the sixth straight year City Hall has dealt with a smaller tax base at budget time.

"It does seem kind of odd," Councilman Bill Bishop said of the drop in assessed values.

"I was expecting to see them at least stabilize or be increasing because I'd seen all the stories about sales being up all over the place - even in Jacksonville they're up and homebuilders are building again. So that was surprising."

Duval County Chief Appraiser Keith Hicks said, relatively speaking, the market is getting better. The 2012 tax rolls for the county posted a 3.2 percent drop from the previous year, while the 2013 preliminary rolls show a drop of 0.8 percent.

Hicks said Duval County has a different real estate history than urban counties in Central and South Florida because their property values zoomed up faster than Duval County during the housing boom and fell harder during the bust.

"So it's logical to expect that they would be rebounding first," he said.

Though Duval County's total values went down again, preliminary 2013 figures show the Beaches communities experienced a slight turnaround, rising by less than 1 percent.

Elsewhere in Northeast Florida, Nassau County and Baker County taxable property value declined again, but the tax base grew by about 2.9 percent in St. Johns County and by almost 2.3 percent in Clay County.

"This is the first time we've been up since 2007, which is pretty remarkable," said Pamela Pearson Mann, assistant appraiser for St. Johns County.

In good economic times, a growing tax base makes it possible for local governments to generate more tax revenue without raising the property tax rate.

The Jacksonville City Council faces the opposite scenario - to raise the same amount of revenue in the budget year starting Oct. 1, the city would have to increase the current tax rate of 10.0353 mils to 10.2107. For the owner of a $150,000 house with a $50,000 homestead exemption, that would increase the city tax bill to $1,021 from $1,003.

The council is considering an even higher tax rate to pay for police, fire, library, and public works programs.

For individual property owners, the Truth in Millage notices sent out in recent weeks are a chance to get a snapshot of what their property is worth.

But in several ways, the market value (also listed as just value) on the TRIM notices doesn't fully capture what a property's sales price would be.

For starters, the sales price in actual real estate transactions typically includes expenses such as closing costs, Realtor commissions and marketing expenses. But Florida law excludes those costs from the market values used in the county property appraisal process.

Instead, the market value for tax appraisals is the "cash value" the seller would get after all the other costs of the transactions are paid out.

To reach that cash value, county property appraisals assume that 15 percent of a sales price is for transaction-related costs. For instance, a home that would sell for $200,000 on the open market would have a market value of $170,000 for tax appraisal purposes.

Another gap between TRIM notice values and current market prices stems from the fact that county appraisals estimate market value as of Jan. 1, based on actual sales during the prior 12 months.

If a private property appraiser did an appraisal on your home today, the appraisal would try to examine sales within the past six months of this year, capturing the most current market trends.

Hicks, the Duval County appraiser, said a private appraisal of a home's value - also known as a fee appraisal - would look for three recent sales of comparable houses.

The county appraiser uses a different method called computer-assisted mass appraisals, which examine sales across neighborhoods.

The mass appraisal starts by determining what it costs to construct a new building at current prices, Hicks said. The cost varies based on factors such as the building's size and type of construction - brick is more expensive than wood siding, for instance.

After determining the cost of a brand-new building, the computer program makes downward adjustments for the age of the property being appraised, a process known as depreciation. The same calculations are done for swimming pools, sheds and other improvements on the property.

Then the county appraiser adjusts that cost-value up or down to mirror what property has actually been selling for in the surrounding neighborhood, Hicks said. Duval County is divided into 1,757 single-family neighborhoods for those sales comparisons.

The appraiser doesn't use bank-owned sales of foreclosure properties because those skew the market downward as lenders seek to cut their losses.

The advantage of the computerized mass appraisals is that they enable county appraisers to prepare tax rolls containing a huge number of properties. Duval County has about 350,000 real estate parcels.

"Mass appraisal is more of a science than an art, whereas fee appraisal is both a science and an art," Cook said, noting how fee appraisals focus on a single property rather than a group of properties.

His firm will do fee appraisals for clients and use that information to argue that tax assessments are too high.

Along with those challenges, county appraisers face scrutiny from the Florida Department of Revenue, which conducts audits and reviews. The review of Duval County's preliminary tax roll found that, based on state law regulating appraisals, its assessed values for single-family homes and condominiums was at 99.7 percent of the state's assessment target.

Hicks said the real estate market seems to headed in a positive direction, but it's too early to predict whether Duval County's tax base will be higher next year. Bishop was guardedly optimistic.

"I would expect a slight uptick at this point," he said. "I would not expect a big one. There are just too many things on the national economic scene that are holding everything back."

david.bauerlein@jacksonville.com, (904) 359-4581

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